OPEC Secretary general Mohammad Sanusi Barkindo has said that OPEC deal with several non-OPEC nations in 2016 saved the oil industry.
Speaking ahead OPEC’s annual meeting in Vienna on Wednesday, Barkindo said the impact of the December 2016 deal to keep the oil production at bay to bring oil prices up, has exceeded “even the most optimistic of predictions.”
Barkindo said: “We have not only turned a historic page, but a new glorious chapter is being authored in the history of the industry by OPEC and its non-OPEC partners. Bringing together 24 producing nations is unparalleled in the history of the oil industry. It is also a platform that is open to all producers.”
“The historic ‘Declaration of Cooperation’ literally rescued the oil industry from its worst-ever downturn and now constitutes a fundamental and essential feature of the ‘new world of energy’. Over the last 18 months, this cooperation has helped return more balance to the oil market, more optimism to the industry and has had a positive impact on the global economy and trade worldwide,” Barkindo said.
“Work never stops”
The Secretary-General said the production cut agreement enabled industry investment to gradually pick up, albeit not yet to pre-2014/15 levels, resulting “in many jobs returning and unemployment easing.”
“However, we appreciate that our work never stops! We are fully committed to sustaining balance and stability in the market, in the interests of both producers and consumers.”
In the coming months, we will look to institutionalize this long-term framework for continuity with an all-inclusive and broad-based participation, to look at some of the industry’s pertinent challenges, as well as the opportunities.
He said it was vital that all stakeholders work together to meet the challenges, as well as the opportunities before them.
Barkindo ended with a quote from an English poet: “As history has shown us, working together can help us build bridges, and achieve great things. As the great English poet John Donne aptly said: “No man is an island entire of itself; Every man is a piece of the continent, a part of the main.”
Saudi minister: We need to increase production
Saudi oil and gas minister Khalid al Falih has warned that there might be a large oil supply deficit in the second half of the year, calling for output to be lifted.
OPEC+, a group of OPEC nations and its non-OPEC allies led by Russia last month said that in April 2018 its member countries achieved a conformity level of 152% to the oil output cuts agreed on in December 2016. At the time, they also pledged to address concerns over potential oil supply shortages, caused in part by U.S. President Donald Trump’s decision to reimpose sanctions on Iran.
According to Reuters, Al Falih on Thursday said that “given the fact that we will see demand in the second half rise significantly above the first half, I think 1 million (of added production per day) sounds to me that that would be a good target to work with.”
OPEC will meet on Friday to decide on the way forward when it comes to its production levels.
Fitch: Oil prices to remain relatively high in 2018
Fitch Ratings last week said the oil prices would remain relatively high for the rest of 2018 due to ongoing geopolitical tensions and strong demand, and despite indications from Saudi Arabia and Russia that they may start to increase production.
“However, marginal producers’ full-cycle costs drive oil prices in the long term and we assume a gradual price fall to below USD60/bbl by 2020. We have raised our Brent and WTI oil price assumptions for 2018 and 2019. Now we assume Brent will average USD70/bbl in 2018 and USD65 in 2019, compared to the previous assumption of USD57.5 in both years. The revision reflects high year-to-date prices, Venezuela’s production decline, continued geopolitical tensions, including the renewal of US oil sanctions on Iran, and strong demand growth,” Fitch said.